Muskrat Falls Project Oversight Committee

Muskrat Falls Project Oversight Committee

Quarterly Project Update

Period Ending December 31, 2019

February 26, 2020

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Table of Contents

1. Q4 2019 Cumulative Project Progress

2. Performance Summaries

3. Oversight Committee Reporting

4. Nalcor Reporting

Annex A - Project Capital Budget and Project Milestone Schedule

Annex B - Project Expenditures

Annex C - Earned Progress

Annex D - Project Milestone Schedule Forecast

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1. Q4 2019 Cumulative Project Progress

Note: Planned Progress Baselined in June 2016

4

2. Q4 2019 Performance Summary


5

3. 2019 Performance Summary


6

2. 2019 Performance Summary - Power Development

Activity Status

Powerhouse and Intake• Turbine and Generator (T&G)

• Units 1 - 4

• Balance of Plant Installation

• Intake Gates

Reached Pit Free by May 2019

Assembly and installation ongoing; Unit 1 assembly

complete; Ready for operation expected in Q1 2020

Approximately 90% complete; commissioning ongoing;

systems to support Unit 1 Ready to Turn complete

Complete and intake impounded

Civil Scope Base scope substantially complete in powerhouse and

spillway

Impoundment Impoundment to full supply level completed on

September 4, 2019

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2. 2019 Performance Summary - Power Supply

Activity Status

Labrador Island Transmission Link

• Overland Transmission Line and Strait of

Belle Isle Cable Crossing

• HVdc Specialties – Muskrat Falls and

Soldiers Pond Converters

• HVdc Specialties – Soldiers Pond

Synchronous Condensers

• Energization and Power Transfer

Assets turned over and under the control of Power

Supply since 2018

Pole 1 complete in 2018; Only remaining work on Pole

2 is installation of interface transformers at Soldiers

Pond for electrode line fault locator

Rotor lift, lube oil contamination and hydrogen piping

contamination complete in July 2019; dynamic

commissioning and root cause investigations into

vibrations and binding ongoing

Pole 1 power transfer commenced in December 2018;

commissioning and energization of monopole

concluded in June 2019; static versions of bipole

software released to site in 2019 to advance static

commissioning

Labrador Transmission Asset (LTA) Construction and commissioning 100% complete and

turned over to Power Supply in June 2019

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3.0 Oversight Committee Reporting

3.1 Overview

3.2 Committee Activities

3.3 Independent Engineer Activities

3.4 Risks and Issues Being Monitored by the Committee

3.5 Subsequent Events to Q4

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3.1 Overview

• The Oversight Committee (Committee) receives details on project costs

incurred, schedule progress, changes in costs and milestone schedule, the

status of construction, and manufacturing and installation contracts.

• The Committee identifies risks and issues and follows up with Nalcor to obtain

more detail and explanation.

• This report covers the October to December 2019 period (Q4) and includes

information on other notable project activity up to the date of drafting of this

report.

• Section 3 of this report contains information developed by the Committee.

Section 4 contains project cost and schedule information provided by Nalcor.

The Annexes contain a more detailed accounting of the information provided in

this report.

• The next Committee Report will cover the period January 2020 – March 2020.

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3.2 Committee Activities

• The Committee met on three occasions during the period to receive project

updates and conduct other Committee business. Committee meeting minutes

and reports are available on the Committee website @ Click here and Click

here.

• The Department of Natural Resources Associate Deputy Minister and Director

participated in site project visits and meeting with the Independent Engineer

(IE) and Natural Resources Canada (NRCan) during November 19-21, 2019.

• The Committee Chair participated as an observer in two monthly calls on

Nalcor project reporting to the IE and NRCan and one call with the IE and

NRCan to discuss Nalcor monthly project reporting and site visits. The

Department of Natural Resources Director also participated in two calls with

the IE and NRCan.

https://www.gov.nl.ca/mfoversight/minutes/

https://www.gov.nl.ca/mfoversight/reports/

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• The IE and NRCan held project site visits and meetings during September and November

2019 and visited GE Grid’s Stafford, UK HVdc protection and controls software

development site in December 2019. Reports from these visits can be found on the

Committee’s website @ Click here.

• In these reports:

• September 15-18, 2019 Site Visits and Meetings

• Status update. No concluding comments.

• November 2019 Project Site Visits and Meetings

• Action Items and Recommendations

• With respect to delays in Unit #1 commissioning, IE request more details on the issues facing theAndritz team.

• IE request a copy of Andritz NCR (non-compliance report) for the Unit #4 elevation anomaly.

• IE request a copy of updated Unit #1 Ready-To-Turn scope document.

• HVAC line faults on the rectifier side may cause loss of HVDC power loss; HVAC faults on theinverter side may cause commutation failure and loss of power flow. Nalcor may wish to verifycapability of LIL converters to ride through AC faults by staged ‘close-in’fault tests on the parallelHVAC lines.

• Regarding design of programming sequences for operation in ‘Overload” mode, failed monopolepower may be replaced from other sources such as the Maritime Link. If that is acceptable, S/Wdesign for operation in ‘Overload’ may be temporarily deferred to free up design resources.

• Completion team appears to have all the requisite specialties and chain of command. Respectivesite responsibilities, sign off process, overall responsibility for the Commissioning andAcceptance, and final approval process for the ITP’s (Inspection and Test Plans) meritclarification and further discussion.

https://www.gov.nl.ca/mfoversight/engineer/

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• December 2019 Stafford, UK Visit

• Comments and Conclusions

• There is a cautious optimism that overall quality is improving.

• While the plan still shows expected completion of the factory acceptance tests (FAT)

by June 9th, 2020, there is little confidence that the target will be met. Progress

velocity remains in risk category ‘red’.

• If available, addition of qualified resource with knowledge of coding and the HVDC/

electric utility industry is recommended.

• Number of outstanding bugs that will be identified/ remedied at later stages presents

an unknown risk to Project schedule and S/W performance.

• GE’s project plan does not include full regression testing of the completed software

release or provides time allowance for bug fixes between the project phases. That

raises a question if that approach will ensure full functionality of this critical

component.

• NALCOR and Amplitude site representatives monitor and provide helpful feedback to

both NALCOR and GE.

• The IE is planning to visit the Muskrat Falls powerhouse in Q1 2020.

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3.4 Risk and Issues being Monitored by the Committee

• In its project reporting, Nalcor identifies risks which may impact project cost and schedule.

The Committee reviews these and other project information to assess project risks. These

risks can be found on pages 14-17 of this report.

• Over the reporting period the Committee noted:

• Reservoir rim stability remained consistent over the Quarter;

• Pennecon (replacement contractor for Astaldi) has largely demobilized from the

powerhouse and spillway as work is largely complete;

• Litigation and Arbitration proceedings are ongoing with Astaldi;

• Document discovery ongoing;

• Protection and Controls (P&C) software completion for the HVdc system and

schedule remains a key project risk. P&C software completion has placed the LITL

on the critical path for the overall project schedule and there continues to be schedule

milestone adjustments;

• Soldiers Pond synchronous condensers vibration and binding issues root cause and

remediation activities are ongoing. Schedule milestone changes are continuing to

occur;

• Forecast completion of key milestones under Power Development changed during

the period; Nalcor has reported little improvement in Andritz Hydro’s productivity; and

• Nalcor/NLH preparedness for interconnection and operations following transfer of

power and final completion of bipole remains a key focus area.

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• The project is now largely in the installation, integration and static and dynamic

commissioning phases which inherently carry associated risks.

• Risks that are being tracked by the Committee include:

A) Safety Performance

• Risk associated with simultaneous operations across multiple work

sites, impact on project delivery particularly in the powerhouse,

energized yards and other assets. This risk will continue through

construction into operations.

B) Contractor Management and Productivity

• Nalcor ability to manage contractors and contractor ability to meet

schedule;

• Contractor management and performance in the powerhouse;

• Potential commercial negotiations to settle claims; and

• Potential for new claims as construction nears completion.

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C) Phased Commissioning

• Completion of P&C system to enhance functionality and reliability;

associated warranty considerations with early asset handover during

commissioning and completion;

• Final completion and testing of HVdc system under low and full

power, in-service system reliability, and timing of contractor release

and effective warranty period; and

• P&C software delivery and final commissioning completion to

maintain project critical path and power delivery.

D) Astaldi

• Astaldi arbitration/litigation outcomes and potential impact on projectcosts.

E) Synchronous Condensers

• Remediation of vibration (Unit 3) and binding (Units 1 and 2) issuesand potential impact on project schedule.

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F) Insurance Claims and Coverage

• Coverage: Lube oil contamination within the Synchronous

Condensers – As of December 2019, remedial work complete on all

three units and eligible GE and Nalcor costs has been recovered.

• Potential coverage: Preservation/re-preservation of Turbine and

Generator parts - investigations ongoing.

• Potential coverage: Spillway secondary concrete and gate guide

heater tubulars repairs – investigations ongoing and repair work

suspended until after winter 2019-2020.

G) Powerhouse Commissioning

• Commissioning of powerhouse generation Units 1 through 4 withinthe project schedule.

H) Reservoir Rim Stability

• Impact of reservoir full supply level on reservoir shoreline/slope

stability.

I) Project Integration and Operations Readiness

• Nalcor/NLH readiness to connect the Muskrat Falls Project to theIsland and North American electricity grid and operate facilitieseffectively.

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J) Project Delivery Team Retention

• Project Team personnel departures and potential impact on project

completion.

K) Additional Risks (above the June 2017 Project Budget)

• Astaldi arbitration/litigation; and

• Alternate HVdc P&C software development.

• Funds are not held within the June 2017 Project Budget for these

additional risks.

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3.5 Subsequent Events to Q4 2019

• In Nalcor’s February 6, 2019 reporting update which included the January 2020 reporting period under

development, Nalcor advised:

• Power Supply (Transmission)• Is expecting at least a six week delay to Factory Acceptance Tested (FAT) interim bipole software

being delivered to site and corresponding impact on subsequent milestones at a minimum.

• Given the status of bipole software development, a new delivery schedule from GE Grid is

required; discussion are ongoing and new schedule is expected in the coming weeks; and

• Based on GE Grid’s historical and current performance, Nalcor is assessing all options to

mitigate further schedule slippage to low power and high power versions of software.

• Power Development (Generation)• In January 2020, a generator and rotor torque key issue was identified during Unit 2 installation.

Fabrication of new keys and change out is ongoing on Units 2, 3 and 4. Repairs to Unit 1,

including manufacturing of replacement parts, delivery, and installation, will require 4 to 6 weeks

to conclude. Other commissioning on Unit 1 is still proceeding. This repair will impact Unit 1 first

power milestone dates by at least 4-6 weeks; and

• Progress on Units 2,3, and 4 continues to trend behind plan and Andritz Hydro’s performance is

lagging behind their estimates. An overall consolidated recovery plan as of February 6, 2020, has

not been received by Nalcor. Andritz Hydro’s schedule dates for Units 2, 3 and 4 are uncertain.

Nalcor is developing revised schedule dates which will be reflected in its January 2020 project

reports. Looking forward it is very likely that Units 3 and 4 may not be commissioned by

September 1, 2020.

• Collectively, project teams are focused on delivery of quality assets rather than advancing with possible asset

deficiencies in order to meet schedule milestone dates. Objectives at this time include delivering necessary

power to Newfoundland and Labrador Hydro under the Power Purchase Agreement (PPA) to offset oil-fired

generation from Holyrood and pass on savings to ratepayers and meeting electricity commitments to Emera

under the project agreements by September 1, 2020. Nalcor will be engaging project stakeholders to advise

accordingly.

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• On February 20, 2020 Nalcor provided Construction Reports for the period ending January 2020 and

including recent events up to February 20, 2020. In these reports Nalcor advised:

• Power Supply (Transmission)

• Contractual dates as agreed with GE Grid in the November 2019 8th Amending

Agreement for the LITL Protection and Controls software delivery remain in effect,

however Nalcor had adjusted the project’s Integrated Project Schedule (IPS) to reflect

GE Grid’s slower than planned progress. The new schedule forecast is as follows:

• Risk for further Interim FAT Software release to site milestone change is high and has

potential to impact the Final Software Delivery schedule.

• Due to GE Power’s synchronous condenser vibration and binding root cause

investigations and ongoing remediation, commissioning of all three synchronous

condenser units is now forecasted for May-June-August for Units 3,2, and 1

respectively. Pending the outcome of root cause investigations and the resolution, there

is a risk that schedule may extend beyond August 2020.

Milestone Date

Interim Bipole Software release to site April 20, 2020

Interim Low Load Dynamic Commissioning Complete May 30, 2020

Final Software release to site July 29, 2020

Dynamic Commissioning Complete August 31, 2020

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• Power Development (Generation)• Unit 1 First Power from Muskrat Falls is now forecasted for March 15, 2020.

• Progress on Units 2,3, and 4 continues to trend behind plan as Andritz Hydro’s performance is

lagging behind their estimates. Nalcor has updated the remaining Muskrat Falls generation

milestone dates based on its assessment of Andritz Hydro’s demonstrated performance to date

and potential for parallel work on Units 3 and 4. The new schedule forecast is as follows:

• Overall, the estimated Commissioning Date of September 1, 2020, set forth in the Labrador Island

Transmission Link and Muskrat Falls Project Schedule is under review, however Nalcor does not anticipated it

to extend past Date Certain (February 28, 2021).

• The Committee will report any changes to schedule and risk in reference to slides 18-20, following review of

project materials over the reporting period in preparation of the Committee’s Q1, 2020 report.

Milestone Date

First Power from Muskrat Falls March 15, 2020

Powerhouse Unit 1 Commissioned – Ready for Operation April 15, 2020

Powerhouse Unit 2 Commissioned – Ready for Operation June 20, 2020

Powerhouse Unit 3 Commissioned – Ready for Operation September 17, 2020

Powerhouse Unit 4 Commissioned – Ready for Operation November 18, 2020

Full Power from Muskrat Falls November 18, 2020

Commissioning Complete – Commissioning Certificate

Issued

September 1, 2020 - Under Review

Date Certain February 28, 2021

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4.0 Nalcor Reporting

4.1 Summary - Quarter Ending December 2019

4.2 Project Expenditures

4.3 Contingency

4.4 Earned Progress

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4.1 Summary – Quarter Ending December 2019

• December 2019 Summary:• Overall construction progress is at 99.3%;

• $9,560 Million in incurred costs; and

• $9,626 Million in committed costs.

• Overall, the project is tracking in compliance with the June 2017 budget and schedule,

however there have been continued schedule milestone adjustments for Power Supply

and Power Development.

• As of December 2019, the June 2017 budget final forecast cost remains unchanged.

• While the overall budget and final forecast cost remains unchanged, variances

between the project budget and final forecast costs have occurred within and among

expenditure categories. Most variances are related to the transfer of budget between

allocations from the contingency budget to the procurement and construction budget.

As well, there are transfers of unused budget from procurement and construction to

the contingency budget to be used in other areas of the project.

• Does not include costs for Additional Risks as reported on slide 17, which at the end

of December 2019 totaled approximately $550 Million.

• The current forecast contingency budget at December 2019 is $134.7 Million, a decrease

of $18.1 Million from the previous Quarter. For further detail see Section 4.3.

• In the November 2019 reporting period, the LTA contingency budget was reduced by $15

Million and funds were reallocated to the Project’s Other Costs - Transition to Operations

(TTO) Category. With this adjustment the project capital budget is now reset to $10,102

Million. See Annex A for the project capital budget.

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Quarterly Planned vs Incurred Cost Variances:

• Planned expenditure by month was set in June 2017.

• During Q4 2019, the variance in planned vs. incurred cost is primarily due

to more than planned expenditure under Contract CH0031 for the Supply

and Install Mechanical and Electrical Auxiliaries, Contracts

CH0007/CH0011-002 for the Intake, Powerhouse, Transition Dams and

Spillway, and Supply and Installation of Hydro-Mechanical Equipment

under Contract CH0032.

• See Section 4.2 and Annex B for further detail.

MFGen

Cumulative Planned: $5,367M Q4 2019 Planned: $70M

Cumulative Incurred: $5,127M Q4 2019 Incurred: $95M

Variance: -$240M (-4.5%) Variance: $25M (35.7%)

24


Quarterly Planned vs Incurred Cost Variances:

• The planned expenditure by month was set in June of 2017.

• During Q4 2019, incurred was higher than planned due to extension of

work scope into 2019, whereas work scope was planned to be

substantially complete in 2018.

• See Section 4.2 and Annex B for further detail.

LITL

Cumulative Planned: $3,714M Q4 2019 Planned: $0M

Cumulative Incurred: $3,568M Q4 2019 Incurred: $13M

Variance: -$146M (-3.9%) Variance: $13M

LTA

Cumulative Planned: $889M Q4 2019 Planned: $0M

Cumulative Incurred: $865M Q4 2019 Incurred: $1M

Variance: -$24M (-2.7%) Variance: $1M

25


Planned vs Earned Progress:

• MFGen

• Cumulative progress as of end Q4 2019 was 98.5% vs. a plan of 99.8%(variance of -1.3%). Quarterly progress for Q4 2019 was 0.9% vs. a planof 0.6% (variance of 0.3%).

• During the Quarter, the cumulative variance decreased from 1.6% to1.3% behind plan.

• As noted above, progress was higher than planned during the Quarter.Rollways were completed, and progress on the Turbine and Generatorunits are progressing, however trending behind plan.

• LITL

• > 99% complete.

• LTA

• Complete.

• See Section 4.2 and Annex C for further detail.

26


Power Development:

• Overall, the project is tracking in compliance with the June 2017 budget and

schedule.

• Power Development’s project milestone schedule dates remain the same as

reported in the Committee’s Q3 2019 reporting Subsequent Events section. See

Annex D for further detail.

• As of January 24, 2019 Andritz Hydro’s progress continues to trend behind plan and

a full recovery plan has not been received by Nalcor.

• Power Development has not provided a December 2019 summary schedule

forecast as it is developing and finalizing a new forecast schedule for Units 2, 3, and

4 which will be included in period ending January 2020 Construction Reports.

• Arbitration with Astaldi continues; payment of Astaldi related liens against the

project continues; Nalcor intends to recover any costs associated from Astaldi or the

contract’s securities; responses to statements of claims and counterclaims and

document discovery ongoing.

• Other project residual contingency, funds are not held within the June 2017 budget

should net damages be awarded in Astaldi’s favour.

27


• Intake Powerhouse Transition Dams and Spillway - Remaining Construction

• Finalization of handover documentation ongoing;

• Demobilization ongoing throughout January 2020; and

• Reviewing remaining punch list scope to be completed in Summer 2020.

• Hydro Mechanical Installation

• Base Spillway scope is complete;

• Previously reported repair work associated with spillway guide and spillway

secondary concrete defects are on hold for the winter season;

• Work necessary to enable spillway operation during the spring freshet 2020 is

to be completed prior to April 1, 2020; and

• Remaining work and repair to be completed post the spring freshet.

• Balance of Plant

• Mechanic completion and commissioning activities ongoing;

• Systems to support Ready to Turn Unit 2 ongoing as work fronts from Andritz

Hydro are made available; and

• As of the end of January 2020, overall work scope is approximately 90%.

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• Turbines and Generators

• Focus areas for Q1 2020 include commissioning of Unit 1 and ongoing installation

of Units 2-4. Forecast expenditure for Q1, 2020 is estimated at approximately $81.7

Million.

Unit % Complete (December 2019)

Status

1 96% Water Up is complete; wet commissioning commenced January 28,

2020 and Powerhouse Unit 1 Commissioned - Ready for Operation is

forecasted for March 2020.

2 78% Upper bracket assembly; installation of servo manifolds, and

fabrication/installation of oil head piping ongoing.

3 56% Rotor and runner assembly; installation of rim plates and

measurement of rotor and preparing for runner flip ongoing.

4 28% Stator piling complete; commenced installation of stator winding and

runner assembly; installation of filler strips and wedging on stator

ongoing.

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Power Supply:

• Overall, the project remains on budget; however further schedule milestone adjustments

have occurred. The LITL Protection and Controls (P&C) bipole software remains critical

path for the overall project schedule.

• Protection and Controls (P&C) Transmission Bipole Software Status

• Software development is currently in the Factory System Test (FST) Phase;

• GE Grid started FST on December 9, 2019; as of end of January 2020 approximately only

60% of test cases have passed;

• Factory Acceptance Test (FAT) for interim bipole software scheduled for February 2, 2020

has been delayed as a result of the FST outcome as GE Grid is currently fixing

outstanding software bugs;

• Power Supply see further schedule slippage risk as high based on historical and current

performance of GE Grid;

• Progress at the Stafford software development site is slower than GE Grid planned

putting pressure on schedule milestone dates;

• GE Grid has indicated that schedule for final bipole software will slip due to resource

constraints; and

• Power Supply has a continuous presence in Stafford overseeing GE Grid’s work.

• Power Supply has not provided a December 2019 summary schedule forecast or software

milestone dates due to uncertainties in bipole software delivery schedule. Power Supply is

in discussion with GE Grid on a revised software and commissioning schedule. This

schedule will be included in period ending January Construction Reports. Existing project

schedule milestone dates can be found in Annex D.

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Synchronous Condensers (SC)

• Vibration Root Cause Investigation

• Ontario Power Generation (OPG) concluded their Operation Deflection Shape

(ODS) test in December 2019;

• FZA (GE Power consultant) concluded their Soil Structure Interaction Analysis

in December 2019;

• Final reports are pending and GE Power will determine path forward based on

final results;

• Early observations from consultants indicated axial vibration is associated with

the Unit’s half-moon support and lateral vibration is associated with the Unit’s

foundation;

• A half-moon stiffener platform for Unit 3 has been installed; GE Power is

running the machine to test vibration levels at various start-up and operating

regimes; and

• Conceptual design for resolution of lateral vibration related to foundation is

expected in early February and includes possible attachment of the existing

synchronous foundation to the base floor slab of the synchronous condenser

building.

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Synchronous Condensers (SC)• Binding Root Cause Investigation

• Lift Oil Twin Orifice Design• Manufacturer refused to modify lift oil orifice design of SC bearing. The manufacturer’s

opinion is that the design is sound; and

• A spare bearing has been redesigned from a twin oil orifice to a single oil pocket; installation

of the spare bearing is pending the outcome of Unit 2 testing with the modified bearing

housing circumferential slot as referenced in paragraph below.

• Bearing/Housing Apex Point• Bearing housing for Unit 2 has been modified to include a circumferential slot; re-installation

is underway; testing planned for February 2020; and

• Bearing modification for Unit 1 is complete; installation subsequent to installation and testing

of Unit 2.

• Schedule• Commissioning of all three units has moved out by a month; November schedule was

March and May 2020, current schedule is March, April and June 2020; correspondingly the

Soldiers Pond Synchronous Condenser Ready for Operation schedule milestone has

moved from May to June 2020 since the last quarterly reporting period; and

• Synchronous Condensers are not currently on the critical path and not required for low

power commissioning, however further schedule slippage remains a risk.

• For further details on schedule milestone dates see Annex D.

• The focus for Q1 2020 remains on continued completions, commissioning and

integration of operations; and the forecast expenditure for Q1 2020 is estimated at

approximately $34.2 Million.

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4.2 Project Expenditures

Columns in tables may not total due to rounding

December 2019 ($000)

Project Budget June

2017 AFE amended

November2019

Cumulative $ Cumulative %

Plan Incurred Variance Plan Incurred VarianceDescription A B C C-B D=B/A E=C/A E-D

NE-LCP Owners Team, Admin and EPCM Services $1,115,235 $1,109,460 $1,035,990 ($73,470) 99.5% 92.9% -6.6%

Feasibility Engineering $37,072 $37,072 $35,846 ($1,226) 100.0% 96.7% -3.3%

Environmental & Regulatory Compliance $42,699 $42,509 $39,198 ($3,311) 99.6% 91.8% -7.8%

Aboriginal Affairs $17,478 $16,642 $44,553 $27,911 95.2% 254.9% 159.7%

Procurement & Construction $8,475,290 $8,681,018 $8,326,263 ($354,755) 102.4% 98.2% -4.2%

Commercial & Legal $90,423 $82,706 $78,165 ($4,541) 91.5% 86.4% -5.0%

Contingency $324,162 $0 $0 $0 0.0% 0.0% 0.0%

TOTAL $10,102,328 $9,969,406 $9,560,015 ($409,391) 98.7% 94.6% -4.1%


Project Budget June 2017 AFE amended

November 2019

Incurred Cumulative Costs

Project Final Forecast Cost

Variance PFC from BudgetDecember 2019 December 2019

Description A B C D=A-C

NE-LCP Owners Team, Admin and EPCM Services $1,115,235 $1,035,990 $1,164,522 ($49,287)

Feasibility Engineering $37,072 $35,846 $35,847 $1,225

Environmental & Regulatory Compliance $42,699 $39,198 $40,409 $2,290

Aboriginal Affairs $17,478 $44,553 $50,960 ($33,482)

Procurement & Construction $8,475,290 $8,326,263 $8,567,460 ($92,170)

Commercial & Legal $90,423 $78,165 $108,452 ($18,029)

Contingency $324,162 $0 $134,679 $189,483

TOTAL $10,102,328 $9,560,015 $10,102,328 $0

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4.3 Contingency


Q4 December 2019 ($000)Project Budget June 2017 AFE

March 2018 AFE

Adjustment

March 2018 AFE

Adjustment

Project Forecast Cost

Project Forecast

Cost Change from Previous Quarter

Variance PFC from Budget

September 2019

December2019

A - B C C - B C - A

Total Project $339,162 $339,162 $324,162 $152,733 $134,679 ($18,054)* ($189,483)

.

* (Includes $15 Million contingency adjustment to LTA as noted on slide 22)

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4.4 Earned Progress

Cumulative to end of December 2019

Weight

Factor %

December 2019 Cumulative % September

2019 VariancePlanned Earned Variance

Sub-Project A B C D = C - B E

Muskrat Falls Generation (MFGen) 46.3% 99.8% 98.5% -1.3% -1.6%

Labrador Island Transmission Link (LITL) 43.9% 100.0% 99.97% -0.03% -0.1%

Labrador Transmission Asset (LTA) 9.8% 100.0% 100.0% 0.0% 0.0%

Muskrat Falls Project - Overall 100.0% 99.9% 99.3% -0.6% -0.7%

December 2019 Period

Weight

Factor %

Period %

Planned Earned Variance

Sub-Project A B C D = C - B

Muskrat Falls Generation (MFGen) 46.3% 0.2% 0.0% -0.2%

Labrador Island Transmission Link (LITL) 43.9% 0.0% 0.03% 0.03%

Labrador Transmission Asset (LTA) 9.8% 0.0% 0.0% 0.0%

Muskrat Falls Project - Overall 100.0% 0.1% 0.0% -0.1%


35

Annex A

I. Project Capital Budget

II. Project Milestone Schedule


36

I. Project Capital Budget

Contingency Budget (in $ thousands) November 2019 AFE

Sub-Project:

Muskrat Falls Generating Facility $226,400

Labrador-Island Transmission Link $92,750

Labrador Transmission Assets $5,012

Total Project $324,162

Muskrat Falls Generating Facility (in $ thousands) June 2017 AFE

Expenditure Category

NE-LCP Owners Team, Admin and EPCM Services $655,850

Feasibility Engineering $17,543

Environmental & Regulatory Compliance $27,125

Aboriginal Affairs $16,395

Procurement & Construction $4,501,984

Commercial & Legal $54,760

Contingency $226,400

Muskrat Falls Generation Total $5,500,056

Labrador-Island Transmission Link (in $ thousands) March 2018 AFE



Feasibility Engineering $19,167

Environmental & Regulatory Compliance $14,726

Aboriginal Affairs $1,003

Procurement & Construction $3,233,690


Contingency $92,750

Labrador-Island Transmission Link Total $3,713,716

Labrador-Transmission Assets (in $ thousands)November 2019

AFE



Feasibility Engineering $363

Environmental & Regulatory Compliance $817

Aboriginal Affairs $80

Procurement & Construction $739,617


Contingency $5,012

Labrador Transmission Assets Total $888,556

Muskrat Falls Capital Cost Budget Total $10,102,328

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II. Project Milestone Schedule

Labrador-Island Transmission Link

June 2017 Planned Dates

SOBI Cable Systems Ready Dec-16

Soldiers Pond Switchyard Ready to Energize Aug-17

Ready for Power Transmission (LTA) Dec-17

Muskrat Falls Converter Station Ready to Energize (Pole 1) Jun-18

HVdc Transmission Line Construction Complete Dec-17

Soldier's Pond Converter Station Ready to Energize (Pole 1) Jun-18

1ST Power Transfer (Pole 1) Jul-18

Soldiers Pond Synchronous Condenser Ready for Operation Jun-18

Ready for Power Transmission (Low Load Testing Complete Pole 1) Dec-18

Muskrat Falls and Soldiers Pond Converter Stations -Bipole Dynamic Testing Complete Mar-19

Commissioning Complete -Commissioning Certificate Issued Sep-20

Labrador Transmission Assets

June 2017 Planned

Dates

HVac Transmission Line Construction Complete May-17

Churchill Falls Switchyard Ready to Energize Nov-17

Muskrat Falls Switchyard Ready to Energize Nov-17

Ready for Power Transmission Dec-17

Commissioning Complete -Commissioning Certificate Issued Sep-20

Muskrat Falls Generating Facility

June 2017 Planned Dates

North Spur Works Ready for Diversion Oct-16

River Diversion Complete Feb-17Reservoir Impoundment Complete Nov-19

Powerhouse Unit 1 Commissioned - Ready for Operation Dec-19First Power from Muskrat Falls Nov-19

Powerhouse Unit 2 Commissioned - Ready for Operation Mar-20Powerhouse Unit 3 Commissioned - Ready for Operation Jun-20Powerhouse Unit 4 Commissioned - Ready for Operation Aug-20

Full Power from Muskrat Falls Aug-20Commissioning Complete - Commissioning Certificate Issued Sep-20

38

Annex B

Project Expenditures

I. Muskrat Falls Generation

II. Labrador Island Transmission Link

III. Labrador Transmission Assets


39


December 2019 ($000)Project Budget June

2017 AFE

Incurred Cumulative Costs

December 2019

Description A B

NE-LCP Owners Team, Admin and EPCM Services $655,850 $551,983

Feasibility Engineering $17,543 $16,865

Environmental & Regulatory Compliance $27,125 $26,828

Aboriginal Affairs $16,395 $43,759

Procurement & Construction $4,501,984 $4,438,831

Commercial & Legal $54,760 $48,846

Contingency $226,400 $0

TOTAL $5,500,056 $5,127,113

December 2019 ($000)Project Budget June 2017 AFE


Planned Incurred Variance Planned Incurred Variance

Description A B C C-B D=B/A E=C/A E-D

NE-LCP Owners Team, Admin and EPCM Services $655,850 $637,725 $551,983 ($85,742) 97.2% 84.2% -13.1%

Feasibility Engineering $17,543 $17,543 $16,865 ($678) 100.0% 96.1% -3.9%

Environmental & Regulatory Compliance $27,125 $26,965 $26,828 ($137) 99.4% 98.9% -0.5%

Aboriginal Affairs $16,395 $15,559 $43,759 $28,200 94.9% 266.9% 172.0%


Commercial & Legal $54,760 $47,043 $48,846 $1,803 85.9% 89.2% 3.3%

Contingency $226,400 $0 $0 $0 0.0% 0.0% 0.0%

TOTAL $5,500,056 $5,367,134 $5,127,113 ($240,021) 97.6% 93.2% -4.4%

40


December 2019 ($000)Project Budget

March 2018 AFE

Incurred Costs

Cumulative December 2019

Description A B


Feasibility Engineering $19,167 $18,679

Environmental & Regulatory Compliance $14,726 $11,557

Aboriginal Affairs $1,003 $625

Procurement & Construction $3,233,690 $3,160,924



TOTAL $3,713,716 $3,567,777

December 2019 ($000)Project Budget

March 2018 AFE


Plan Incurred Variance Plan Incurred Variance


NE-LCP Owners Team, Admin and EPCM Services $322,101 $332,101 $353,243 $21,142 103.1% 109.7% 6.6%

Feasibility Engineering $19,167 $19,167 $18,679 ($488) 100.0% 97.5% -2.5%

Environmental & Regulatory Compliance $14,726 $14,726 $11,557 ($3,169) 100.0% 78.5% -21.5%

Aboriginal Affairs $1,003 $1,003 $625 ($378) 100.0% 62.3% -37.7%


Commercial & Legal $30,280 $30,280 $22,748 ($7,532) 100.0% 75.1% -24.9%

Contingency $92,750 $0 $0 $0 0.0% 0.0% 0.0%

TOTAL $3,713,716 $3,713,716 $3,567,777 ($145,939) 100.0% 96.1% -3.9%

41



Project Budget November 2019 AFE


Plan Incurred Variance Plan Incurred Variance


NE-LCP Owners Team, Admin and EPCM Services $137,284 $139,634 $130,764 ($8,870) 101.7% 95.3% -6.5%

Feasibility Engineering $363 $363 $303 ($60) 100.0% 83.5% -16.5%

Environmental & Regulatory Compliance $817 $817 $812 ($5) 100.0% 99.4% -0.6%

Aboriginal Affairs $80 $80 $168 $88 100.0% 209.7% 109.7%

Procurement & Construction $739,617 $742,279 $726,508 ($15,771) 100.4% 98.2% -2.1%

Commercial & Legal $5,383 $5,383 $6,571 $1,188 100.0% 122.1% 22.1%

Contingency $5,012 $0 $0 $0 0.0% 0.0% 0.0%

TOTAL $888,556 $888,556 $865,126 ($23,430) 100.0% 97.4% -2.6%


Project Budget November 2019

AFE

Incurred Costs

Cumulative December 2019

Description A B


Feasibility Engineering $363 $303

Environmental & Regulatory Compliance $817 $812

Aboriginal Affairs $80 $168

Procurement & Construction $739,617 $726,508



TOTAL $888,556 $865,126

42

Annex C

Earned Progress

I. Overall Construction

II. Muskrat Falls Generation

III. Labrador Island Transmission Link

IV. Labrador Transmission Assets


43

I. Overall Construction

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

May

-13

Jun

-13

Jul-

13

Au

g-1

3

Se

p-1

3

Oct-

13

No

v-1

3

Dec-1

3

Jan

-14

Fe

b-1

4

Mar-1

4

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Se

p-1

4

Oct-

14

No

v-1

4

Dec-1

4

Jan

-15

Fe

b-1

5

Mar-1

5

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Se

p-1

5

Oct-

15

No

v-1

5

Dec-1

5

Jan

-16

Fe

b-1

6

Mar-1

6

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Se

p-1

6

Oct-

16

No

v-1

6

Dec-1

6

Jan

-17

Fe

b-1

7

Mar-1

7

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Se

p-1

7

Oct-

17

No

v-1

7

Dec-1

7

Jan

-18

Fe

b-1

8

Mar-1

8

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Se

p-1

8

Oct-

18

No

v-1

8

Dec-1

8

Jan

-19

Fe

b-1

9

Mar-1

9

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Se

p-1

9

Oct-

19

No

v-1

9

Dec-1

9

Jan

-20

Fe

b-2

0

Mar-2

0

Ap

r-2

0

May

-20

Jun

-20

Cu

mu

lati

ve

Pro

gre

ss

Pe

rio

d P

rog

ress

OVERALL CONSTRUCTION/COMMISSIONING PROGRESS CURVE

Overall Period Planned

Overall Period Earned

Overall Period Forecast

Overall Cuml Planned

Overall Cuml Earned

Overall Cuml Forecast

44


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

May

-13

Jun

-13

Jul-

13

Au

g-1

3

Se

p-1

3

Oct-

13

No

v-1

3

Dec-1

3

Jan

-14

Fe

b-1

4

Mar-1

4

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Se

p-1

4

Oct-

14

No

v-1

4

Dec-1

4

Jan

-15

Fe

b-1

5

Mar-1

5

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Se

p-1

5

Oct-

15

No

v-1

5

Dec-1

5

Jan

-16

Fe

b-1

6

Mar-1

6

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Se

p-1

6

Oct-

16

No

v-1

6

Dec-1

6

Jan

-17

Fe

b-1

7

Mar-1

7

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Se

p-1

7

Oct-

17

No

v-1

7

Dec-1

7

Jan

-18

Fe

b-1

8

Mar-1

8

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Se

p-1

8

Oct-

18

No

v-1

8

Dec-1

8

Jan

-19

Fe

b-1

9

Mar-1

9

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Se

p-1

9

Oct-

19

No

v-1

9

Dec-1

9

Jan

-20

Fe

b-2

0

Mar-2

0

Ap

r-2

0

May

-20

Jun

-20

Jul-

20

Jul-

20

Jul-

20

Cu

mu

lati

ve

Pro

gre

ss

Pe

rio

d P

rog

ress

MFG CONSTRUCTION/COMMISSIONING PROGRESS CURVE

MFG Period Planned

MFG Period Earned

MFG Period Forecast

MFG Cuml Planned

MFG Cuml Earned

MFG Cuml Forecast

45


December 2019Weight

Factor %

December 2019 Cumulative % September 2019

VariancePlan Earned Variance


MFG Road/Camp/Constr. Power 8.9% 100.0% 100.0% 0.0% 0.0%

MFG Reservoir Preparation 5.8% 100.0% 100.0% 0.0% 0.0%

MFG Spillway & Gates 12.2% 100.0% 100.0% 0.0% -1.8%

MFG North Spur Stabilization 3.9% 100.0% 100.0% 0.0% 0.0%

MFG North Dam 5.7% 100.0% 100.0% 0.0% 0.0%

MFG Powerhouse & Intake 61.3% 99.7% 97.6% -2.1% -2.1%

MFG South Dam 1.1% 100.0% 100.0% 0.0% 0.0%

MFG Misc:Eng/ 315kV/Site Rest./logistic 1.1% 97.0% 99.1% 2.1% -4.3%

MFGen - Overall 100.0% 99.8% 98.5% -1.3% -1.6%

* Adjusted for MFGen rollway installation schedule N/A N/A N/A N/A

46


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

May

-13

Jun

-13

Jul-

13

Au

g-1

3

Sep

-13

Oct

-13

No

v-1

3

Dec

-13

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec

-14

Jan

-15

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

6

Dec

-16

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

Dec

-17

Jan

-18

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

Dec

-18

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Sep

-19

Oct

-19

No

v-1

9

Dec

-19

Jan

-20

Feb

-20

Mar

-20

Ap

r-2

0

May

-20

Jun

-20

Cu

mu

lati

ve

Pro

gre

ss

Pe

rio

d P

rogr

ess

LITL CONSTRUCTION/COMMISSIONING PROGRESS CURVE

LITL Period Planned

LITL Period Earned

LITL Period Forecast

LITL Cuml Planned

LITL Cuml Earned

LITL Cuml Forecast

47


December 2019Weight December 2019 Cumulative % September 2019

VarianceFactor % Plan Earned Variance


LITL Muskrat Falls Converter 6.1% 100.0% 99.9% -0.1% -0.3%

LITL Soldiers Pond Converter 5.5% 100.0% 99.6% -0.4% -0.6%

LITL HVdc Transmission Line Seg 1/2 26.8% 100.0% 100.0% 0.0% 0.0%

LITL HVdc Transmission Line Seg 3/4/5 34.2% 100.0% 100.0% 0.0% 0.0%

LITL Electrode Sites 0.8% 100.0% 100.0% 0.0% 0.0%

LITL Transition Compounds 1.7% 100.0% 100.0% 0.0% 0.0%

LITL SOBI Cable Crossing 17.7% 100.0% 100.0% 0.0% 0.0%

LITL Soldiers Pond Switchyard 2.7% 100.0% 100.0% 0.0% 0.0%

LITL Soldiers Pond Sync. Condensors 3.1% 100.0% 99.9% -0.1% -0.1%

LITL Misc 1.4% 100.0% 100.0% 0.0% 0.0%

LITL- Overall 100.0% 100.0% 99.97% -0.03% -0.06%

48


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

May

-13

Jun

-13

Jul-

13

Au

g-1

3

Sep

-13

Oct

-13

No

v-1

3

Dec

-13

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec

-14

Jan

-15

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

6

Dec

-16

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

Dec

-17

Jan

-18

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

Dec

-18

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Sep

-19

Oct

-19

No

v-1

9

Dec

-19

Cum

ula

tive

Pro

gres

s

Per

iod

Pro

gres

s

LTA CONSTRUCTION/COMMISSIONING PROGRESS CURVE

LTA Period Planned

LTA Period Earned

LTA Period Forecast

LTA Cuml Planned

LTA Cuml Earned

LTA Cuml Forecast

49


December 2019

Weight December 2019 Cumulative %September

2019 VarianceFactor % Plan Earned Variance

Sub-Project A B C D = C – B E

LTA HVac Transmission Line Seg1/2 - MF to CF 62.8% 100.0% 100.0% 0.0% 0.0%

LTA Churchill Falls Switchyard 21.7% 100.0% 100.0% 0.0% 0.0%

LTA Muskrat Falls Switchyard 13.4% 100.0% 100.0% 0.0% 0.0%

LTA Misc 2.1% 100.0% 100.0% 0.0% 0.0%

LTA - Overall 100.0% 100.0% 100.0% 0.0% 0.0%

50

Annex D

Project Milestone Schedule Forecast




51


December 2019

Planned Date

June 2017December 2019

Actual/Forecast

Project Sanction 17-Dec-12 Complete

North Spur Works Ready for Diversion 31-Oct-16 Complete

River Diversion Complete 15-Feb-17 Complete

Reservoir Impoundment Complete 1-Nov-19 Complete

Powerhouse Unit 1 Commissioned - Ready for Operation 19-Dec-19 215-Mar-2020

First Power from Muskrat Falls 2-Nov-19 115-Feb-20

Powerhouse Unit 2 Commissioned - Ready for Operation 3-Mar-20 316-April-2020

Powerhouse Unit 3 Commissioned - Ready for Operation 9-Jun-20 9-Jun-20

Powerhouse Unit 4 Commissioned - Ready for Operation 14-Aug-20 14-Aug-20

Full Power from Muskrat Falls 14-Aug-20 14-Aug-20

Commissioning Complete - Commissioning Certificate Issued 1-Sep-20 1-Sep-20

1 > 3 month forecast date adjustment beyond the June 2017 planned date as reported in Committee Q3 2019 reporting Subsequent Events.2 < 3 month forecast date adjustment beyond the June 2017 planned date as reported in Committee Q3 2019 reporting Subsequent Events.3 > 1 month forecast date adjustment beyond the June 2017 planned date as reported in Committee Q3 2019 reporting Subsequent Events.

52


December 2019

Planned Date

June 2017

December 2019

Actual/forecast


SOBI Cable Systems Ready 9-Dec-16 Complete

Soldiers Pond Switchyard Ready to Energize 31-Aug-17 Complete

Ready for Power Transmission (LTA) 31-Dec-17 Complete

Muskrat Falls Converter Station Ready to Energize (Pole 1) 1-Jun-18 Complete

HVdc Transmission Line Construction Complete 31-Dec-17 Complete

Soldier's Pond Converter Station Ready to Energize (Pole 1) 1-Jun-18 Complete

1ST Power Transfer (Pole 1) 1-Jul-18

Completion of 45

megawatt heat run

Soldiers Pond Synchronous Condenser Ready for Operation 1-Jun-18 1 30-June-2020

Ready for Power Transmission (Low Load Testing Complete Pole 1) 1-Dec-18 Complete

Muskrat Falls and Soldiers Pond Converter Stations - Bipole Dynamic Testing Complete 31-Mar-19 215-July-20


1 = 1month forecast date adjustment since Committee Q3 2019 reporting Subsequent Events. 2 < 1month forecast date adjustment as reported in Committee Q3 2019 reporting Subsequent Events.

53


December 2019

June 2017 Budget

Planned Date

December 2019

Actual/Forecast


HVac Transmission Line Construction Complete 31-May-17

Complete: Turnover of HVac TL

and all subsystems complete

Churchill Falls Switchyard Ready to Energize 30-Nov-17 Complete

Muskrat Falls Switchyard Ready to Energize 30-Nov-17 Complete

Ready for Power Transmission 31-Dec-17 Complete


54

End of Report

Muskrat Falls Project Oversight Committee

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